At a time when many of Europe's countries are waist-deep in the global recession, Italy is beginning to take measures to try to solve its massive debt burden, estimated at about 120 percent of its gross domestic product.
On June 30, the cabinet approved a drastic budget cut, which Italy's president, Giorgio Napolitano, approved on July 6; it will now go to parliament for debate. The plan is to slash 48 billion euro from the budget over the next three years, more than the minimum amount set by the European Union.
‘For the current year, 2011, there is a need to maintain cuts of two billion euro,' Economy minister Giulio Tremonti told the press. ‘I am certain that the desired objective of 3.9 billion will be reached. In 2012 there needs to be a correction equal to six billion euro, which will be added to everything done in past years.' The largest cuts and savings will be realized through increasing taxes on bank trading activity and high-consumption cars, freezing pay for civil servants and creating a new levy on stock-market transactions. Local governments are also projected to receive 9.7 billion euro less through 2013-2014. However, income taxes will decrease, which is in accordance with Tremonti's desire for a stronger focus on taxing sales rather than individual incomes.